Risk Adjustment Having Reverse Robin Hood Effect

The goal is to help keep insurance markets stable by sharing the “risk” of sicker people and removing any incentive for plans to avoid individuals who need more medical care. Such stability is likely to encourage competition and keep prices lower for consumers, while its absence can undermine both and limit coverage choices — the basic principles of the law. Yet the way the Obama administration has carried out this strategy shows another unexpected consequence of the 2010 health-care law. The administration defends its approach, but critics say the “risk adjustment” program is having a reverse-Robin Hood effect — taking money from some plans that are small, innovative or fast-growing, while handing windfalls to some of the industry’s most entrenched players.

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